Five years in the making: How Costco will shake up NZ retail

Snaring brand that marries quantity with quality took a big effort, writes Anne Gibson

Areal estate investment specialist worked with a group patiently and quietly for five years to bring the world’s second-largest retailer, Costco Wholesale, to this country.

Brent McGregor, the Aucklandbased executive chairman of real estate specialists CBRE New Zealand, was cited by Westgate landowner Mark Gunton of NZ Retail Property Group this week as being crucial to the deal behind the arrival of the American giant with net annual sales the same as New Zealand’s entire GDP.

McGregor was somewhat reluctant to take the accolade, but acknowledged this week: “I just worked hard for a long time. It’s part of a global relationship and we just chipped away at it for five years.”

After CBRE Australia worked with Costco on a number of deals, McGregor said the New Zealand arm of the business first made a connection in 2014.

“For obvious reasons, Costco wanted to investigate the Auckland market as a first entry into New Zealand and our involvement was to confidentially identify a number of site options and prepare demographic and drive time analysis for each potential site, and then marry this up against Costco’s mandate,” he said.

More than 12 Auckland sites were initially considered in the following four years “and after one or two dead ends”, Westgate was chosen, McGregor said.

The deal team comprised real estate, town planning and legal advisers locally working with Costco, he said, naming senior research director Zoltan Moricz and the retail valuation and advisory service headed by Tim Arnott.

Costco announced it would build a full-format store with a “fuel station, tyre centre, food court, optometrist, hearing aid services, groceries and

It’s part of a global relationship and we just chipped away at it for five years. Brent McGregor, CBRE executive chairman

homewares”. Costco Wholesale’s arrival in this country will give Kiwis access to far cheaper groceries and consumables, according to Aucklandborn Minneapolis resident Mark Charlton, who cited weekly petrol saving as just one example.

“I save around US.37c/gallon on petrol,” said Charlton, a regular Costco customer who also cited discounted tyre deals with a road hazard warranty programme included. “Costco is going to have a very positive impact for consumers that will lead to lower prices,” Charlton said.

His household pays a US$120/year membership but he says the savings, Costco’s 2 per cent rebate on purchases plus a Visa card cash-back deal more than make up for that outlay “so essentially our membership is free. We shop for milk, bread and many other groceries at

You end up walking out with $500 worth of stuff you had no idea you needed. Gervais Laird, Costco shopper

local variations of Pak’nSave and New World and tend to shop on a daily basis for what we are cooking for dinner.

“We go to Costco less regularly but spend more than US$100 ($153) when we do go.”

The quantities are big but the quality is high and it draws families, Charlton said: “Even the carts are twice the size or more of regular shopping carts.

“Toothpaste comes in five-packs, dental floss nine-packs, toilet paper

30-roll packs, paper towels 12 rolls, gin and vodka 1.75l bottles. If one has a party or a holiday dinner, it’s economical to get the huge meat, fish and ready-made packs.

“Negatives are storage and having that much on hand.

“Maybe those without self-control eat or drink more because of huge quantities in the cupboards or fridge,” Charlton said.

Auckland lawyer Gervais Laird, who moved to Australia with his family, said he and his wife Kara walked into Sydney’s Costco at Auburn to just look — but spent hundreds of dollars.

“You end up walking out with $500 worth of stuff you had no idea you needed,” Laird said this week.

“There is so much stuff at Cosco, it’s insane. You buy in bulk so it seems cheap — everything from coffins and spa pools to bulk food and toilet paper.”

Costco might draw about 300 cars an hour to its planned $90 million Auckland store, but is yet to apply for resource consents to build the store, not due to open till 2021.

Costco Wholesale Australia and New Zealand managing director Patrick Noone and real estate director Abdul Deeb attended Tuesday’s announcement of the arrival. Asked about potential retail trade, Noone said:

“It could be around 300 cars an hour but it will be busiest Saturdays and Sundays.”

Costco Wholesale Auburn Warehouse, for example, is open

10am-8.30pm weekdays and 9.30am6.30pm weekends, giving a 58-hour trading week.

Each of Costco’s 11 Australian stores get about around 600 cars/ hour on average.

If Costco draws 300 cars an hour in Auckland and trades similar hours as Auburn, that could mean nearly 1 million annual vehicle visits. CBRE chairman Brent McGregor agreed with that methodology and the numbers.